Guangxi Liugong Machinery Co., Ltd (LiuGong) constructed production base in Tianjin, intending to radiate the market in Northern China and furthermore expand overseas market.

On Feb. 26^th, LiuGong Northern Construction Machinery Development & Manufacturing Base (Tianjin LiuGong for short) was formally put into production as a roll-off ceremony of bulldozer and loader was held. Since then, LiuGong’s flag rooted steadily in the Logistics Processing Area of Airport in Tianjin Free Trade Zone.

According to the President Liu Guang’an of LiuGong, Tianjin LiuGong was totally 400 Mu, which will contain development and commercial center, loader plant, bulldozer plant and part plant after completion of construction. Once being totally put into production, the base will manufacture more than 10, 000 sets of construction machinery with sales income reaching 5 billion Yuan annually.

Currently, the first phase of construction project in Tianjin LiuGong had finished, in which the bulldozer and loader production lines has been completed basically. As the second phase of project moves on, other equipments will be gradually ready in the future.

From the ground-breaking in July 5^th, 2008 till now, Tianjin LiuGong cost just more than half a year. The engineers and workers at the site overcame the geological and weather troubles to ensure the on-time production of the project. Furthermore, leaders from Tianjin Municipal Party Committee and Binhai New Zone paid great attention the project, and listed it to be one of 20 Key Industrial Projects in Tianjin, which was another guarantee that LiuGong Northern Development & Manufacturing Base could be successfully put into production.

Rooting in Tianjin to radiate the market in Northern China

On the 5^th China Industry Forum held the other days, Zhu Yuanhu, the Deputy-secretary of Party Committee in LiuGong Group told the journalist during the interview that LiuGong occupied the advantageous market in Southwest, Northwest and coast parts in China; however, the market shares in Northern and Northeastern China were not as good as expected. During planned economy time, as relative department divided the market, each enterprise could supply to the counterpart market and there existed little competition, which exactly led to the market layout today. The market in Northeastern and Northern markets held high recognition to the former brands, which left a lot of difficulties to LiuGong when exploring the markets.

In these areas, LiuGong was not satisfactory toward exploring markets through marketing team and dealership. Therefore, LiuGong took the strategic measure to build base in Tianjin, which meant a lot to the development. It stood for moving the production lines to the front edge of market, enabling the users to easily access products, which is the most direct way to erect the image of the enterprise. In addition, the products on these markets needed no more being delivered from Liuzhou, saving the cost as well. 

Why did LiuGong not to set plant in Northeastern China as it was another weak marketplace?

Obviously Tianjin owned much better location advantages. To set plant in Tianjin can not only radiate the most Northern market, but also can serve Northeastern market rapidly as Tianjin is convenient both on road and water.

According to Bi Haidong, Vice-President of LiuGong, LiuGong will gain the advantages in terms of service and parts after setting Northern base. Beyond, LiuGong opened Financing and Rental Company in Beijing and the layout will go forward to cover the whole mainland.

In recent years, overseas market counted a lot in the course of rapid development of construction machinery industry. As Liuzhou is far from coast lines, the export of LiuGong products was quite inconvenient. The opening of Tianjin Liugong will release the pressure of exporting overseas.

Although enterprises had to adjust the expansion plan due to the financial crisis, LiuGong did not reduce their investment on Northern Base and overseas company. LiuGong had set up companies in Australia, India and North America to open export business. It was informed that LiuGong would further set companies in South America and Russian area.

Roll-off of New Product Signed to Enter Bulldozer Industry

“Bulldozers has almost the same profit ratio with cranes and forklifts and higher than that of loaders.” Bi Haidong said, “This shows that the competition of domestic bulldozer market is not ample. If the market was controlled by several enterprises, it was no good for users and healthy development of the market.” As the new bulldozer rolled off, LiuGong accomplished the complete layout in terms of earthmoving machinery.

In order to push forward bulldozer project, LiuGong made great effort to prepare human resources, and the company has set up a professional development team including more than 30 people.

Steady Target to Enlarge Production Capacity

In the long-medium planning of LiuGong, they hoped to realize sales income of RMB 30 Billion Yuan by 2012. In the past 2008, the sales income of LiuGong Group was RMB 12 Billion Yuan, which meant that in next four years, LiuGong has to increase 150% on sales income.

In the planning, Tianjin LiuGong will produce 5000 sets of loaders and 2000 sets of bulldozers, sales income of which will exceed RMB 3 Billion Yuan. If the production and sales targets could be achieved on time, it will weigh a lot on realizing the sales target in 2012.

The construction of Tianjin LiuGong will proceed through three phases. In the original planning, the production line of bulldozer belonged to the second phase. However, due to economic crisis, LiuGong adjusted the plant construction to divide a part of loader plant to be bulldozer plant. This could temporarily reduce the production capacity of loaders to handle with financial crisis, and also fastened the pace that LiuGong rolled off bulldozers in Tianjin so as to launch the products to the market as soon as possible.

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